Charles Nwaoguji, [email protected]
Infrastructure and sustainable development are top priorities for governments globally. However as rapid urbanisation and population growth put pressure on emerging markets to develop critical new infrastructure, aging assets and continued underinvestment mean developed economies need to expand their existing focus on infrastructure.
Meanwhile, smart cities are emerging as an investment need, with the interface between urban growth, technology, infrastructure and capital requirements presenting a unique set of opportunities and challenges.
The importance of infrastructure to the industrial sector of any economy cannot be overlooked, thus making its development key to the survival of the sector. The contribution of infrastructure to an economy, especially its industrial sector, cannot also be over-stressed as it makes productivity more of a breeze through promotion of investment, movement of products, people and services, and facilitation of information and communication, all these, being salient factors for economic diversification. However, the deplorable situation of most of the infrastructural facilities in Nigeria, especially of the roads, electric power, and water, tend to go against these values of infrastructure, mostly due to inadequate funding from government for maintenance of these facilities, careless use, vandalism , corruption, and delays in construction.
Poor infrastructure leads to low productivity because producers of goods and services are discouraged due to higher cost of production, and sometimes, overall inability to get goods to the points of sale. This further leads to lower generation of income. Inadequate supply of electric power can be listed as one of the factors that led to the decline in industrial and manufacturing capacity utilisation.
The insignificant impact of electricity on the industrial sector may be explained by its obvious inadequacy in the nation. Power fluctuations, low voltage supply, and outright power outages are enough to drive individuals, much more industries, to seek alternative sources of power.
It is important that the government ensures that whatever measures that need to be taken to revamp and maintain the power sector, thereby creating better power supply, will be carried out. This will ensure greater industrial output and lower production costs for the sector. It is also necessary that government puts measures in place to curb corruption in the system, so that, the money disbursed for infrastructural development is properly channeled.
An inspection is necessary to further ensure that the works. Power fluctuations, low voltage supply, and outright power outages are enough to drive individuals, much more industries, to seek alternative sources of power. This can encroach on profit (because of the rising cost of all forms of fuel), but production remains autonomous for as long as it is feasible. Some companies rely solely on the alternative source of energy acquired, so much that they don’t switch back to the nation’s power supply grid for fear of sudden disruptions. In his paper entiled, “Providing Sustainable Infrastructure: The Basis for a nation’s growth”, the Director. Centre for Economic Policy Analysis and Research (CEPAR) University of Lagos, Professor Ndubisi Nwokoma, said it is important that the government ensures that whatever measures that need to be taken to revamp and maintain the power sector to create better power supply chain should be carried out without delay.
“This will ensure greater industrial output and lower production costs for the sector. It is also necessary that government puts measures in place to curb corruption in the system, so that, the money disbursed for infrastructural development is properly channeled. An inspection is necessary to further ensure that the works, “ he stated.
He observed that investing in those sectors that have the greatest potential for providing the necessary stimuli for development in other sectors is important.
He said when basic infrastructure such as road network and power are provided by the public sector, the functioning of the private sector as well as other productive activities in the economy is enhanced. He stated that poor infrastructure in Africa results in an uncompetitive industrial sector with little linkages – leading to high production and transaction costs.
Commenting on the challenges impeding the financing of infrastructure in Nigeria, he said, high transaction costs, the limited number of “bankable” projects, the multiplicity of regulations, permits and licenses required, and the various governmental agencies and institutions which investors have to deal with in a typical infrastructure project, corruption, illicit financial flows and poor funding, among many others.
For the president of Manufacturers Association of Nigeria (MAN), Engr. Mansur Ahmed, a key component to development and Industrialisation of Nigeria is the extent to which the government and private sector can develop and maintain vital infrastructure such as power, roads, rail, ports and other facilities. The current infrastructure gap in Africa is estimated to be $93 billion annually (40 percent of which is power), or roughly one trillion dollars over the next decade, whilst in Nigeria according to the African Development Bank the infrastructure gap is believed to be $350 billion aggregated. To achieve industrialisation and inclusive growth, industries must have access to reliable and affordable infrastructure.”
He said that the Federal and State Governments, as well as key ministries and institutions, such as ICRC (Infrastructure Concession Regulatory Commission) and Infrastructure Bank, have to play a vital role in the development of infrastructure in given the huge gaps in the availability/quality of infrastructure and access to infrastructure in Nigeria.
These will provide the required infrastructure, incentives, and streamlined regulations available. available in world-class manufacturing hubs anywhere else in the world.
In Nigeria, he explained the state of infrastructures is bad – in housing, access roads, power supply and communication facilities, among other. Over 70% of the federal roads are bad.
“ Most infrastructures are now decayed and need repair, rehabilitation or replacement. Infrastructural deficiencies affect the competitiveness of industries, particularly SMEs because of their direct and indirect effect on the operating cost of the firms. Costs of transportation of both raw materials and finished goods have become very high for these firms.
Indirect effect of infrastructural deficiencies come in the form of higher charges from the suppliers of raw materials, due to the extra transportation costs incurred.”
The MAN boss said due to infrastructural deficiency many firms in the industrial clusters in Lagos-noted for high concentration of manufacturing activities have closed or relocated abroad & mostly replaced by new retail shops. For example, the once busy Oba Akran avenue is now less busy with some of the multi-national companies relocating to neighbouring countries.
Remaining firms still spend substantial amount of their profit to generate their own power, though power supply appears to have improved generally. The self-provision of power by manufacturing SMEs affects their profitability, productivity, wealth creation, capacity to create employment and chances of survival and competitiveness.
The current dilapidation of the Apapa/Festac Town/Mile 2 axis road network discouraging – compounded by the litter of heavy-duty vehicles in the environment.The Federal Government efforts in this regard are yet to yield substantial positive results.
The state of infrastructure has deteriorated partly due to lack of private investment, the large initial capital outlay required and the length of time it takes to recoup investment.
The lack of interest of the private sector and the government’s low budgetary allocation over time led to the very poor state of infrastructure in Nigeria.
The Vice President of MAN Lagos Zone Mr. John Aluya said Government need to encourages private sector partnerships and public-private partnership in enhancing infrastructure and upscaling production generally.
“ Extensive and increasing involvement of the private sector in the provision of infrastructure and improving ageing infrastructure, previously the sole domain of public authorities is irreversible. The public-private partnership (PPP) model is still unpopular, though. Some challenges include: the suspicion with which the private sector is viewed worldwide, as to being driven primarily by the profit motive and thus not interested in pursuing the public good. public officials preference for budgetary spending, thus seeing the use of PPP as an end to budgetary spending. However, PPP complements and does not displace government fiscal operations,” he stressed..
Going forward, he stated also that government needs to identify the critical stakeholders in the project process, communicate with them appropriately, to facilitate their understanding of the process, attract potential investors and reduce risks.
This enhances success, Professor Nwokoma noted that MDAs should also be encouraged to use PPP to address Nigeria’s infrastructure deficit. Some challenges of infrastructure devpt earlier identified in this presentation are being addressed namely: There is more focused attempt to
address infrastructural deficiencies in the country through railways, improved road network and Ports revival. Power of focused leadership. Corruption is being tackled headlong (or so it seems). This minimises wastages and gives more value for money.
Adding that,” infrastructural development is key to national economic development, as acknowledged nationally, globally and in the literature. Efforts at the continental level have resulted in the approval of PIDA to enhance Africa’s growth in fulfilment of the AU Agenda 2063. For industry or manufacturing to grow, basic infrastructure must be available. Provision of infrastructure and security will bring back the boom of the various industrial clusters across the country. The public sector is presently challenged and funding is a major issue. Hence, the private sector must be fully engaged through PPP arrangements to develop Nigeria’s infrastructure.”